The Continuing Story of the Bells and the CLECs

Friday Nov 2nd 2001 by SmallBusinessComputing Staff

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In the August issue of SBC, we reported that Federal Communications Commission (FCC) chief Michael Powell recommended steeper fines for Baby Bell companies that did not abide by the 'equal access' provisions of the Telecommunications Act of 1996 ['Steeper Fines Might Leave Baby Bells Crying,' page 15]. Under that law, Baby Bells are required to allow Competitive Local Exchange Carriers (CLECs) fair and equal access to their networks.

By Robert J. Wagman & William C. Gillis

In the August issue of SBC, we reported that Federal Communications Commission (FCC) chief Michael Powell recommended steeper fines for Baby Bell companies that did not abide by the 'equal access' provisions of the Telecommunications Act of 1996 ['Steeper Fines Might Leave Baby Bells Crying,' page 15]. Under that law, Baby Bells are required to allow Competitive Local Exchange Carriers (CLECs) fair and equal access to their networks.

A new bill proposes to do away with those provisions altogether. Reps. W.J. 'Billy' Tauzin, R-La. and John Dingell, D-Mich., have introduced the Internet Freedom and Broadband Deployment Act of 2001. Commonly known as Tauzin-Dingell, the bill would essentially repeal the competition sections of the 1996 law.

In the five years since President Clinton signed the 1996 Act, little has changed in the local telecommunications markets controlled by the Bells. New competitors control less than 8 percent of local phone service, and experts worry that Tauzin-Dingell will make it even more difficult for competitors.

Scott Blake Harris, managing partner at Washington, D.C.-based law firm Harris, Wiltshire & Grannis and a former FCC International Bureau Chief, says that Tauzin-Dingell would hamper CLECs in local telecommunications markets, and would likely result in higher prices for consumers. 'I am afraid that if Tauzin-Dingell passes in its current form it will make that kind of competition essentially impossible,' Harris says. 'And one has to assume that any lessening of competition will bring about higher pricing and fewer innovative services.'

While the Republican leadership in the House threw its weight behind the bill and won a narrow majority, the bill faces tough sailing in the Senate. Harris believes the bill has little chance of passing in its existing form. Tauzin-Dingell may never become law, but the battle over its passage may shape telecommunications policy for a long time to come.